Time For Torches & Pitchforks – The Little Guy Is About To Get Monkey-Hammered Again

The reputations of Ben and Janet are going to be eviscerated in 2016. That’s because the US economy will slide into recession in defiance of every claim they have made for their snake oil monetary policies. The plain fact is, massive falsification of financial markets via their “wealth effects” doctrine did not levitate main street prosperity at all; it just fueled another giant speculative mania in the Wall Street casino.

The prospect that the leaders of our monetary politburo are about to be tarred and feathered by economic reality might be satisfying enough if it led to the repudiation of Keynesian central planning and a thorough housecleaning at the Fed. Unfortunately, it will also mean that tens of millions of retail investors and 401k holders will be taken to the slaughterhouse for the third time this century.

And this time the Fed is out of dry powder, meaning retail investors will never recover as they did after 2002 and 2009. Moreover, the overwhelming share of main street losses will be the among baby-boom demographic——sixty and seventy something’s who will be down for the count.

As Jim Quinn so graphically put it an the adjacent piece,

Investors are lazing around the waterhole like unsuspecting gazelles. This herd will be running for their lives in the near future, as danger is lurking.

 

With each passing day the evidence mounts, and this morning’s trade data was a doozy. During November exports shrank by 2% and are now down 12% from the peak, and at the lowest level since March 2010.

Yes, you can count on the Keynesian paint-by-the-numbers crowd to insist that exports don’t matter that much. Goods exports are just 8% of GDP and total exports including services are 12%.

So what is 12% when Janet is busy at the Fed’s dashboard, tweaking the dials and thereby goosing the labor market back to the pink of full employment health? Continue reading

US Trade Data Shows Unites Foreign And Domestic Production In Recession

Submitted by Jeffrey Snider  –  Alhambra Investment Partners

From the perspective of foreign economies, the primary economic problem is US consumers. That sets up a contradiction as noted earlier today with durable goods estimates; economists think US consumers are quite healthy and the contraction in manufacturing is due to foreign economies. The inventory imbalance, or bloat as it was aptly described, cannot be an overseas problem and therefore more than suggests that US manufacturers hold the same depressive capacity as those foreign economies.

Examination of the US’ trade figures shows the export recession quite clearly, but instead of imports coming in furiously to gain market share from US manufacturing there only remains the opposite. Both exports and imports are contracting which can only add up to a global problem sharing common cause – US consumers (and European).

ABOOK Dec 2015 ExIm ImportsABOOK Dec 2015 ExIm Imports Cycle

Since the trade balance tips so far in favor of imports, the global trade paradigm skews in the direction of US “demand” as a primary driver of activity. If global “demand” for US goods softens so sharply then it stands to reason that export economies are being subjected to decreases in activity originating here. The import numbers bear that out easily, as US import “demand” and flow has continued to sink all year. Imports fell sharply in October, -7.4%, matching May for the second worst month of the cycle (only March 2013 was more of a decline). These sharp declines continue month after month despite the dollar supposedly making imported goods that much more competitive.

And in the places where we are supposed to find foreign goods rapidly displacing US manufacturing in competition for “healthy consumers” there is only contraction. Imports from China fell 2% in October, bringing the 6-month average back down to just 3% yet again. For an economic system predicated on sustained 20% growth rates, sustained 3% growth is not just depressive it is dangerous (exactly as is unfolding there). Continue reading

The Daily Debt Rattle

 Submitted by Raúl Ilargi Meijer  –  The Automatic Earth

US Companies Led the World in 2015 Debt Defaults (BBG)
China’s Unprecedented Real Estate Bubble Is a Ticking Time Bomb (Dent)
The Most Important China Chart Of 2015 (BI)
China Suspends Foreign Banks’ Forex Business (Reuters)
Oil Prices Become a Problem for US Steelmakers (BBG)
Oil-Producing US States Battered as Tax-Gushing Wells Are Shut Down (BBG)
Gulf States Forced To Empty Their Sovereign Wealth Funds (Reuters)
Oil Price Rout Will Bring End To Era Of Saudi Arabian Largesse (Telegraph)
Oil Crash Is Giving Ship Owners a Billion-Dollar Windfall (BBG)
Puerto Rico’s Debt Trap (Simon Johnson)
Marc Faber Seeing Recession Clashes With Yellen, Likes Treasuries (BBG)
World’s Oldest Bank Sells Bad Loans To Deutsche (BBG)
Italy’s Five Star Movement on the Rise (FT)
In the Year of Trump, the Joke Was On Us (Matt Taibbi)
Turkey’s Dangerous Game in Syria (WSJ)
Ukraine Inflation Hits 44% Amid Economic Collapse (Telegraph)
Frontex Sends 300 Guards In Migrant Mission To Greece (AFP)
Heated Areas To Open To Homeless In Athens As Cold Snap Expected (Kath.)
As Europe Turns Gray (Pantelis Boukalas)